Form 1099-NEC is what a U.S. business files when it pays someone who is not an employee for services. "NEC" stands for nonemployee compensation. One copy goes to the IRS, and one copy goes to the person who was paid.
Most founders meet this form from both sides. You are the payer when your company hires a designer, a developer or a bookkeeper. You are the payee when a U.S. client pays you as a contractor. The rules are not symmetrical, so it matters which side you are on.
Two things about this form are commonly wrong online. The first is the amount. Almost every article still says $600, and that number is out of date for payments made in 2026 and later. The second is who the form is for. If the person being paid is a nonresident alien, the IRS instructions do not use a 1099-NEC at all.
What the rule actually requires
The IRS Instructions for Forms 1099-MISC and 1099-NEC tell you to file a Form 1099-NEC for each person you paid at least $2,000 during the year, when all four of these are true:
- The payment went to someone who is not your employee.
- You made the payment for services in the course of your trade or business. Money you pay a person for private reasons does not count.
- The recipient is an individual, a partnership, an estate, or in some cases a corporation.
- Your payments to that one person add up to at least $2,000 for the year.
The threshold used to be $600. It was raised to $2,000 for tax years beginning after 2025, which means payments made from 2026 onward, under P.L. 119-21. The IRS instructions say the amount may be adjusted for inflation beginning in calendar year 2027, so check the figure again for later years.
The count is per person, per payer, per year. It is not a total of everything you spent on contractors. Say your company paid three people during the year: $1,500 to one, $2,400 to another, and $900 to a third. You file one 1099-NEC, for the person who received $2,400. The other two are below the line.
Payments to the same person add up across the year. If you paid one contractor $900 in March and $1,300 in October, the total is $2,200, and you file a form for that contractor.
Corporations are usually left out
You generally do not file a 1099-NEC for payments to a corporation, including an LLC that is treated as a C corporation or an S corporation. There are exceptions. Attorneys' fees must be reported even when the law firm is a corporation, and so must payments by a federal executive agency for services.
This is why you ask a contractor how their business is taxed before you decide whether a form is needed.
The deadline is January 31, for both copies
For Form 1099-NEC you must furnish the payee statement and file with the IRS by January 31. Paper and electronic filing share that same date.
Form 1099-MISC is different, but only on the IRS side. You file a 1099-MISC with the IRS by February 28 on paper, or March 31 if you file electronically. The payee statement for a 1099-MISC is still due January 31. Businesses that file both forms often apply the later 1099-MISC filing dates to their 1099-NECs and file late.
Get the W-9 before you pay, not in January
To file the form you need the contractor's taxpayer identification number. You collect it with Form W-9. If a payee has not given you a TIN, backup withholding rules can apply to what you pay them.
Ask for the W-9 when you hire the person. Chasing a contractor for a taxpayer number in the last week of January, after the working relationship has ended, is how deadlines get missed.
🇺🇸 If the IRS counts you as a U.S. person
You will be on both sides of this form.
As the person being paid. Each U.S. client that paid you $2,000 or more in a year sends you a 1099-NEC by January 31, unless your own business is taxed as a C or S corporation, which usually removes the client's duty to file. The same information goes to the IRS. If you run a sole proprietorship or a single-member LLC, this income normally goes on Schedule C of your Form 1040.
The threshold decides whether a form is issued. It does not decide whether the money is taxable. A client who paid you $1,700 sends no form, and that $1,700 is still income you report. The IRS is not the only party who knows about it, and the absence of a form is not the absence of a rule.
As the person paying. For each contractor who crossed $2,000 during the year, file a 1099-NEC by January 31 and send the contractor their copy by the same date. Keep the W-9 you collected. Check whether the contractor is a corporation, because that usually removes the requirement, with attorneys as the main exception.
🌏 If it does not
Here the two sides of the form pull apart.
As the person being paid, you normally do not get a 1099-NEC. The IRS instructions for these forms point payments made to nonresident aliens to a different form: Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. That form belongs to the withholding system for foreign persons, and it has its own rules and its own deadlines.
So if no 1099-NEC arrives in your inbox in January, that is expected. It does not mean nothing was reported and it does not mean nothing is owed. It means your payments, if they are subject to withholding, travel on a different track.
You tell the payer which track you are on with Form W-8BEN. The IRS says to give Form W-8BEN to the withholding agent or payer if you are a foreign person and you are the beneficial owner of an amount subject to withholding. You give it when the payer asks, whether or not you are claiming a reduced rate under a treaty.
This is where a common accident happens. Freelance platforms and client onboarding forms often default to a W-9, and the W-9 is a certification that you are a U.S. person. Signing one when you are not a U.S. person puts you on the wrong track from the first payment. The form you sign at the start decides the form you receive at the end.
As the person paying, nothing changes. If you own a U.S. LLC and that LLC pays U.S. contractors in the course of its business, the LLC files 1099-NECs exactly like any other U.S. business. Same $2,000 threshold. Same January 31 deadline. Your own residency is not part of the test. The rule looks at the payer's trade or business and at who was paid, not at where the owner lives.
What changes depending on who you are
| 🇺🇸 U.S. person | 🌏 Not a U.S. person | |
|---|---|---|
| The form you give a U.S. payer | Form W-9 | Form W-8BEN |
| The form you receive from a U.S. payer | Form 1099-NEC | Generally not a 1099-NEC. Payments to nonresident aliens go on Form 1042-S |
| Amount that triggers the form you receive | $2,000 per payer, per year | The $2,000 1099-NEC threshold is not the test that applies to you |
| If your company pays U.S. contractors | File a 1099-NEC per contractor at $2,000 | Identical. File a 1099-NEC per contractor at $2,000 |
| Deadline when you are the payer | January 31 | Identical. January 31 |
Read the bottom two rows carefully. The payer side of this form does not split at all. Everything that splits is on the receiving side.
Common mistakes
🇺🇸 If the IRS counts you as a U.S. person
- Using $600 as the threshold. That figure applies to earlier years. For payments made from 2026 onward it is $2,000.
- Treating a missing form as missing income. A client who paid you $1,700 sends no 1099-NEC, and you still report the $1,700.
- Applying the 1099-MISC filing dates to a 1099-NEC. The 1099-NEC is filed by January 31. February 28 and March 31 are the dates for filing a 1099-MISC with the IRS.
- Asking for the W-9 in January. Contractors who have finished the job and moved on are slow to answer.
🌏 If it does not
- Signing a Form W-9 because a client's onboarding page asked for one. The W-9 certifies U.S. status. Give a Form W-8BEN instead.
- Waiting for a 1099-NEC that will never arrive, and concluding that nothing about the payments was reported.
- Assuming your own non-residency excuses your U.S. LLC from filing 1099-NECs for the U.S. contractors it paid. It does not. The company's duty is the same as any other U.S. business.
FAQ
What is the reporting threshold for Form 1099-NEC?
$2,000 paid to one person during the year, for services in the course of your trade or business. The old threshold was $600. The $2,000 figure applies to tax years beginning after 2025, which means payments made in 2026 and later, and the IRS says it may be adjusted for inflation beginning in calendar year 2027.
I paid one contractor $1,800 over the year. Do I file a 1099-NEC?
No. $1,800 is below the $2,000 threshold, so no form is required for that contractor. The payment is still a business expense in your own records, and it is still taxable income to the contractor.
Do I file a 1099-NEC for a contractor that is a corporation?
Usually not. Payments to a corporation, including an LLC treated as a C or S corporation, are generally exempt from this reporting. The main exception founders run into is attorneys' fees, which must be reported even when the law firm is a corporation.
When is Form 1099-NEC due?
January 31. You must furnish the payee their statement and file with the IRS by that date, whether you file on paper or electronically.
Why is the 1099-MISC deadline different?
The difference is on the IRS filing side. You file a 1099-MISC with the IRS by February 28 on paper, or March 31 if you file electronically, while a 1099-NEC is filed by January 31 either way. The payee statement is due January 31 for both forms. If you file both, treat the IRS dates as two separate deadlines.
I am not a U.S. person. Will my U.S. client send me a 1099-NEC?
Normally no. The IRS instructions direct payments made to nonresident aliens to Form 1042-S rather than to a 1099. You give the payer a Form W-8BEN so the payer knows to treat you as a foreign person.
My U.S. LLC is owned by a non-resident. Do we still file 1099-NECs?
Yes, if the LLC paid U.S. contractors $2,000 or more each in the course of its business. The filing rule looks at the payer and the payee. It does not look at where the owner of the payer lives.
I never received a 1099-NEC. Do I still owe tax on the money?
Yes. The threshold decides whether a form is issued, not whether the income is taxable. Income you were paid is income you report, form or no form.